Someone is Lying. Is it Forbes or Baseball Owners?

The magazine and baseball's powers-that-be tussle once more over the financial state of the industry.

Forbes magazine published its annual financial rankings of America’s big league ball clubs last week, drawing a strong reaction from Major League Baseball.

“Baseball owners continue to slam the ball out of the park. Team values increased an average of 15 percent for the second consecutive year, to $376 million, in our 2006 survey of Major League Baseball’s 30 franchises,” Forbes’ Michael Ozanian wrote. “Overall operating income increased to $360 million ($12.1 million per team) from $132 million ($4.4 million per team) the previous year, as revenue increased faster than player salaries.”

According to Forbes, 25 of 30 major league teams had operating profits last year. But baseball’s powers-that-be were not so happy with the seemingly good news.

“Forbes has never had access to financial information from Major League Baseball or the individual clubs,” baseball executive VP Rob Manfred responded, adding that Forbes’ estimates “materially misstate the financial performance of the industry as a whole and of the individual clubs.”

“They make these numbers up,” Manfred told the Associated Press. “However close and lucky they may get in aggregate, there are individual instances that materially misstate the situations. From our perspective, we just think it’s important that people understand and realize these are not real in any sense of the word.” (“We stand by the list,” a Forbes spokeswoman responded.)

Manfred’s strong statement surprised us — until we went back to the archives, and discovered that the current fireworks are merely the latest in a years-long feud between Forbes and baseball over the financial state of the industry.

“Every year Forbes comes out with this, and every year baseball gets annoyed and upset and angry, and they release a statement saying that it’s all wrong,” observes Don Walker, who covers the sports business for the Milwaukee Journal Sentinel.

“It’s recognized throughout baseball that those numbers are not accurate,” Tampa Bay Devil Rays spokesman Rick Vaughn said after Forbes released its analysis last year. “If the past is any indication, the accuracy has never been there [in the Forbes list],” MLB spokesman Rich Levin told the Houston Chronicle that same April — before he had even seen the estimates.

In April 2003, the Seattle Times reported Mariners CEO Howard Lincoln’s assertion that his team had cleared a 2002 profit of $10.7 million — less than half of the $23.3 million profit Forbes claimed.

“How they come up with $23 million is amazing,” Lincoln said. “But they did not see our financial statement or talk to anyone here. They pulled that $23 million out of thin air.”

The Times reported that the team’s problem with Forbes dated to 1997, and that Mariners officials had been “banned from giving information to Forbes.”

But even the Mariners’ rebuke of Forbes that year didn’t compare to Commissioner Bud Selig’s reaction in the spring of 2002.

Selig had told Congress the previous December that major league teams had collectively lost $232 million, with only nine teams posting an operating profit — yet Forbes reported an operating profit of $75 million for the teams overall, with a full 20 of them profitable.

“There is no way. Those numbers are fiction, they are pure fiction,” Selig said of Forbes’ statistics, the AP reported. “It’s so disappointingly wrong, and they knew it. I think it’s a very sad day for journalism in America when somebody knowingly writes something that is not only not true but has been told it is not true.”

This spring, moreover, a number of teams told their local baseball writers that Forbes’ estimates were not to be believed. A paragraph from the Los Angeles Times’ story on the value of the Angels and Dodgers was typical: “Teams do not release data to Forbes. In January, [owner Arte] Moreno said the Angels came ‘very close’ to turning a profit last year, on revenues of $185 million. Dodger chief operating officer Marty Greenspun said the Forbes numbers were incorrect but would not provide the correct ones. He confirmed the Dodgers made money last season.”

Therein lies the nut of the problem. On the one hand, baseball execs can be counted on to lambaste Forbes’ numbers each year, while declining to give hard numbers of their own. “A lot of these teams are privately held,” says the Journal Sentinel’s Walker, “so you really don’t know.”

Yet Forbes does not make things easy. In the current issue of the magazine, it presents all 30 teams’ franchise values, revenues, debt and operating income in a large, impressive chart — explaining some of the factors it took into consideration but offering not a word about its sources. Where did the numbers come from? Essentially, Forbes is asking its readers to accept its evaluation of every major league team’s financial health on blind faith.

So who to trust? It’s important to remember that Forbes’ numbers are estimates, not certifiable facts — and that, on their side, the teams can adjust their financial figures in different ways.

But until both baseball teams and Forbes are more forthcoming, we’ll have to give the magazine the benefit of the doubt, while advocating some healthy skepticism.

“Ozanian and Forbes do almost the best they can, given the limited access they have,” sports economist Andrew Zimbalist told us. “As journalism, it’s a good effort. But if you try to go to the bank with these numbers, you’re making a big mistake.”

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